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Government Trickle-Down Trickery

Friday December 22nd, 2017   •   Posted by K. Lloyd Billingsley at 11:49am PST   •  

The Republicans’ victorious tax bill lowers the corporate rate from 35 to 21 percent but is nothing approaching a flat tax because it retains, count ‘em, seven tax brackets. According to the New York Times it will cut taxes for about 75 percent of filers in 2018, but nobody should consider it a gift. Allowing workers to keep more of the money they have earned does not constitute a gift, and the government still gets the workers’ money before they do through withholding, a relic of World War II. Even so, while not a gift, the tax package is not, as Democrats charge, an example of “trickle down” economics.

As statists have it, the government gives tax cuts to “the rich” in the hopes that some of their wealth will trickle down to the workers. The true dynamic is different. The harder one works and the more one earns, the more government grabs through taxes. Statists call this “progressive” taxation but it’s really punitive. Government sets out to redistribute the money to those whom politicians deem the most worthy, in many cases those who, as Mencken put it, vote for a living rather than work for a living. Trouble is, the money must trickle down through multiple layers of highly absorbent bureaucratic sediment. So a workers’ dollar cannot travel from, say, Topeka to Washington DC, go out and party on the town, then return intact as a full dollar to anybody in Topeka.

In California, the state with the highest rate of income tax at 13.3 percent, K-12 education is by law the biggest budget outlay currently at about $76.6 billion. This money must trickle down through state, county and local bureaucracies before it reaches the classroom. That is the true trickle-down dynamic in action. Letting workers keep more of what they earn is not trickle-down, and not a gift at any time of year. When workers are the first to get their own earnings, before greedy government grabs it, true tax reform could be at hand.

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December 2017